With the pandemic dismantling our known normal and paving the way for a new kind of life, one that is dominated by masks, sanitizers, and physical distance, businesses and financial institutions had to find alternative means to stay afloat. Industries across several sectors started exploring the digital space to go about their business, while financial institutions revolutionized banking with some digital measures. Now that we left 2020 behind and have entered the second year of the pandemic, it is time to reflect on how the financial sector responded to a crisis of this order. With the closure of bank branches, financial institutions were left with no other option but to seek novel and digital ways to stay put. This resulted in a new wave of digital banking that uses data analytics and technology to enhance customer experiences.
That said, today, we shall shed light on a few digital transformation trends that we need to watch out for in the banking sector for 2021. The banking sector has transformed itself digitally in the face of the pandemic. However, there is more to the transformation, and it is expected that this transformation shall take place over 2021. Therefore, without further ado, let us glance through some of the potential digital trends that shall inundate the banking sector in 2021.
Data Analytics and AI Shall Be Used for Predictive Personalization in Banking Experience:
2021 is expected to be the year of the next stage of evolution in the domain of financial marketing. Data analytics and Artificial Intelligence shall help in leveraging data to further the prospect of predictive personalization. The combined use of AI and machine learning shall help banks and financial institutions come up with websites tailored to suit their customers’ needs.
These websites shall provide the customers with financial advice, recommendations, and a hoard of different features and enhance their overall banking experience. Research and statistics have shown that personalization in any service brings in more customers because it makes it easy for people to find the right solutions to their needs quickly. This level of predictive personalization is more than just a simplified account opening. It is a process that simplifies every movement of the customer and enhances his interaction with the bank on many different levels.
A Shift to Cloud Computing Shall Be Observed:
Cloud computing in the domain of banking has not been much encouraged, and many financial institutions are quite apprehensive about this movement due to security concerns. However, it looks like 2021 shall be the year when a swift movement to cloud computing shall be observed. Cloud computing is expected to offer ease in processing massive amounts of data within a short span and furnish customers and banking professionals with quick accessibility of the same data across platforms.
Therefore, the use of hybrid cloud infrastructures shall possibly rise over the year. Financial institutions, no matter what their scale is, shall adopt cloud computing. This is because more providers shall invest generously in scalable capacities. According to experts, the pandemic has led to disruptions in every sector, which is also the reason why a rapid shift to cloud computing can be observed in the financial sector.
Automation and Robotics in the Banking Sector Shall Be on the Rise:
Like every other industry, the banking sector has been running with the help of automated technology and robotics. However, with the pandemic wreaking havoc and crippling our economy, the process of automation shall be enhanced, which shall further enhance the overall banking experience of customers. This stress on automation and robotics technology is only natural in an economy that is still reeling under the pandemic’s pressure.
Robotic Process Automation or RPA is expected to come in as a welcome relief in this economy and pose as a cost-effective solution and substitute for human labor. RPA has several benefits that the banking sector can reap in a post-pandemic world. It increases accuracy, brings efficiency in processes like cash optimization, and makes a customer’s experience as seamless as possible. Automation and RPA, too, like cloud computing, are being aided by several providers in the most scalable capabilities. This has, thus, resulted in their widespread adoption in the financial sector.
There Shall Be an Increased Investment in Privacy and Security:
With the banking sector’s digital transformation, there shall be an increased level of investment in privacy and security. This is because the digital space is prone to security breaches and, therefore, requires more attention. Plus, customers are now becoming increasingly apprehensive about how safe their bank and other sensitive information are within the digital space. They have also grown intolerant of internal organizational mistakes.
These are the reasons that shall lead cybersecurity to become the USP for the banking sector. Many experts believe that consumers shall gradually become the owner of their identities, and financial institutions shall become the space where these identities are stored and held securely. In a nutshell, consumers shall have access to their data stored across multiple bank applications, with the banks and financial institutions protecting their data at every turn.
Open Banking Shall Help Banks to Raise More Revenue:
The final trend that we shall discuss in this article is that of open banking. Banks shall seek open banking services to raise more revenue and help their customers access more data. This is expected to leave the door open to a hoard of other innovative banking services via APIs. Open banking shall become the norm in the future and provide customers with a seamless banking experience. It shall attract multiple investors and thus, become a technology that banks and other financial institutions swear by in 2021.
The points mentioned above are just a few of the many digital transformation trends in the banking sector that we shall witness over 2021. However, it is important to remember that for a complete and holistic digital transformation to take place. Every level of the financial institution needs to work in order and sync.